Minnesota House Republicans proposed $1.35 billion in tax cuts Wednesday, with the benefits going to farmers, Social Security recipients, student loan debtors, business property owners and others.
“The folks who haven’t seen the benefit of these surpluses are Minnesotans, the same people who are responsible for those surpluses,” said House Speaker Kurt Daudt, R-Crown, in reference to a forecast $1.65 billion state budget surplus.
The bill is similar in approach, but smaller, to a tax measure that passed the House with significant bipartisan majorities in 2016. It stalled after Gov. Mark Dayton vetoed the bill, citing a technical mistake in its drafting, then was unable to strike a deal with Republicans to revive it.
The House GOP plan raises the threshold of Social Security income subject to state tax, reduces property taxes for farmers paying school construction bonds, exempts the first $200,000 in property value from the statewide property tax on businesses, gives a tax break to people with school loans and helps families with child care costs. It also eliminates an automatic yearly increase in the cigarette tax.
The House proposal takes a different approach than a Senate GOP plan to reduce the lowest income tax bracket.
Dayton has expressed skepticism about large tax cuts if they reduce money for his priorities like prekindergarten and health and human services programs.
Rep. Greg Davids, R-Preston and chairman of the House Taxes Committee, said he wants to pass a bill Dayton will sign.
“68, 34 and one,” he said, referring to the votes needed for a majority in the House and Senate plus Dayton.
Asked about the cigarette tax provision, Daudt criticized Dayton: “This was a big broken promise by the governor because I know he wants to paint it as something different from what it is. It’s a tax on low-income Minnesotans,” he said, referring to tobacco taxes, which are disproportionately paid by lower income Minnesotans because they are more likely to smoke.
A Dayton spokesman said the 2013 tobacco tax increase of $1.60 per pack plus automatic annual increases was implemented to discourage a “very socially expensive activity,” referring to the health care costs that often fall on public insurance programs.
The adult smoking rate has declined 10 percent since the tax was implemented, said Dayton spokesman Sam Fettig.
Despite the controversy surrounding the tobacco tax, the bulk of the GOP plan comprises cuts targeted at important interest groups, like senior citizens, parents with children, business owners and young people with student debt.
The reduction in taxes on Social Security income would cost $270 million. More than $125 million would address college affordability. A reduction in the business property tax costs $203 million. Farmers would save $42 million on property taxes.
DFL Minority Leader Melissa Hortman released a statement, attacking the plan as a gift to “Republican corporate donors.”